Two-thirds of Brits don’t seek regulated financial advice
Despite the ongoing cost-of-living crisis (or perhaps because of it), the majority of UK adults are not seeking regulated financial advice.
A survey of 2,000 people between the ages of 18 and 75 by the Financial Services Compensation Scheme (FSCS) revealed almost two-thirds (64%) of UK adults with savings, investments or a mortgage have not sought regulated financial advice in the last five years.
And cost is very much the main driver. More than half (55%) of those with any financial products think that “paying for financial advice is for the wealthy”.
Meanwhile, one in five of those who obtained free guidance rather than regulated advice said they did so because they believed the service was “too expensive”.
Despite the growing ‘advice gap’, the findings revealed that among those UK adults who have paid for regulated financial advice, 62% said they would use the same service from the original provider again for any future advice needs.
Mortgages drive advice
For those who were seeking advice, mortgages were the key driver. More than a third (38%) were taking advice on their mortgage, likely from a specialist mortgage broker, the FSCS noted.
When asked whether they trusted brokers, nearly half (48%) believed mortgage advisers are very or fairly trustworthy. And while that seems a decent number, brokers lag behind the likes of solicitors, accountants and financial advisers in terms of trustworthiness.
Across the regions in the UK, adults with savings, investments or a mortgage living in Greater London had been the most likely to seek financial advice in the last five years – with 49% of them saying they did so.
This was followed by South England (38%), Scotland (36%), North England (34%), and Wales (33%).
Adults living in the Midlands were the least likely to seek financial advice (31%).
Lack of knowledge could be exploited
The FSCS noted that the ‘advice gap’ could leave vulnerable consumers open to scams and could lead them to make poor financial decisions.
Caroline Rainbird, chief executive of FSCS, said: “The financial ‘advice gap’ is a concern for FSCS, particularly as scammers will prey on peoples’ fears and exploit any gaps in their financial knowledge, putting them at greater risk of making poor decisions about their money.
“At FSCS, we see the impact of poor advice every day. It results in millions of pounds each year disappearing from consumers’ pockets. We can only offer protection on financial products and services that are regulated, and we encourage consumers to check if they are likely to have access to FSCS protection, if something goes wrong.
“It is important for people to be fully aware and confident about the decisions they are making with their money and the risks that come with taking guidance from unauthorised sources.”